News - ECB prepares digital euro

By Luc Vesters

ECB prepares digital euro

Crypto acceptance

As of last week, the European Central Bank with five official notices seeking providers to develop services related to a digital euro. More than half of the allocated budget of 1.2 billion euros is earmarked for the development of offline payments. Providers are being sought for risk management, information security, not to mention a smartphone app.

In the past, ECB representatives have stressed that working on a digital euro is not a commitment to issue one. However, the announcements could put new pressure on the ECB to actually implement the project.

For several years, the central bank has been considering issuing a digital version of the euro, currently used by 340 million people in 20 EU countries. By 2023, the EU Commission has already proposed a law for digital currency.

As much as 56 percent of the budget was committed to potential providers of the offline component of the CBDC. The possibility of offline payments is seen as one of the main obstacles to the introduction of CBDC's.

Recent developments suggest that the ECB is now in the preparation phase for the Digital Euro project. A decision on euro issuance will be made only after a law is passed in the European Parliament. There is strong political opposition to this.

With the digital euro, the ECB also wants to halt the triumph of cryptocurrencies such as Bitcoin and offer citizens a digital state currency. This is unlikely to convince Bitcoin enthusiasts, as BTC, with its decentralization and absolute scarcity, is seen by them as an alternative to state fiat money.

Critics of the digital euro also warn of dangers to citizens. These include increased state surveillance, the enforcement of negative interest rates with no alternative and financial repression against political dissidents.

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